Last Thursday, GlobalFoundries broke ground on their Fab 2 facility that is scheduled to be completed around July 2011. The New York endeavor is estimated to cost $4.2 billion overall, making it one of the most costly fabs ever constructed.

When completed, it will likely focus on both SOI and non-SOI fabrication processes at 22nm as the term “global” in their name indicates they are not just focused on manufacturing products for AMD as they are today.

It will have a life expectancy of at least 20 years, will employ 1400 top-skilled workers and an additional 3200 or so in support positions. Annual estimated payroll will be $290 million.

$4.2 billion to build a facility to manufacture semiconductor components? Do we really need such a huge endeavor? I mean, suppose we do some math on this leaving out items such as interest and unknown debt.

$4.2 billion over 20 years is $210 million per year. That will repay the cost of the fab. It is estimated that ongoing expenses will be $290 million per year, so we’re up to a minimum of $500 million per year in costs alone, not including buying semiconductor materials for manufacturing. I’m not sure what those are, so let’s just leave them out of the equation for the moment.

In order to take in $500 million per year, that means the company will have to sell a minimum of $1.37 million every day, which if we have an average sales price per item (CPUs) of $15, yields a selling quantity of items per day of 92K items.

If we consider the number of dies possible per 300mm wafer to be somewhere around 500, with an 80% yield, that means the facility will have to process a minimum of about 230 wafers per day, which is 1600 wafer starts per week.

Now, it’s been reported the Dresden Germany fab will be capable of 35,000 wafer starts per week. If we factor in an 80% yield with an average of 500 dies per wafer, that comes to 14 million dies per week. If they are an average of $15 each, that would equate to $210 million per week, or $10.92 billion per year, justifying the $4.2 billion manufacturing expense many times over.

It is likely the average unit price will be less though, as GlobalFoundries will likely manufacture all manner of products, bringing the average price down well below $15.